Oil Patch Troubles Push Bank Failures to Post-Depression High

Oil Patch Troubles Push Bank Failures to Post-Depression High

Article excerpt

of Texas, Oklahoma and Louisiana pushed closings nationwide to a
post-Depression record in 1987 and a top federal regulator said
Tuesday he expects at best only a small improvement this year.

The Federal Deposit Insurance Corp. reported 184 bank closings
among the 14,000 commercial banks it inured last year. More than
half - 95 - came in three states plagued by the moribund oil market.
Fifty banks closed their doors in Texas, 31 in Oklahoma and 14 in
Louisiana.

An additional 19 banks required assistance from the insurance
fund to stay afloat. Fifteen of those were in the three oil states.

``Our current hope would be that next year would be a little
better in terms of bank failures,'' FDIC Chairman L. William Seidman
said. ``If it is, it'll be by a small margin. Much will depend on
what happens in the energy-producing states.''

Early last fall, Seidman said he expected bank failures to
decline to about 150 in 1988, but he said Tuesday in an interview
following an FDIC board meeting that the recent drop in oil prices
has helped to dampen his previous optimism.

Oil prices plunged early in 1986 from more than $30 a barrel to
the $15 range. They recovered to more than $20 a barrel, but fell
again late last year after feuding OPEC nations failed to reach an
agreement that would have supported prices.

Seidman said banks so far have suffered no great harm from the
Oct. 19 stock market crash, but added, ``It does create
uncertainty.''

``In those areas already having economic problems, (any slowdown
caused by crash) could make it worse,'' he said.

Seidman called 1987 ``one of the most difficult and unusual
years in banking since this corporation has been in business. …